Al Hilal Bank from the United Arab Emirates was the first bank to issue a Sharia-compliant bond via a block chain. In cooperation with the Swiss FinTech Jibrel, the financial institution issued a US$1 million bond to a private investor.
Bitcoin news: Are crypto currencies halal?
In many places Bitcoin news already reported on the affinity of the Arabian Peninsula to Distributed Ledger Technology (DLT): https://www.geldplus.net/en/bitcoin-news-trader-review/ The announcement of the first successful execution of a so-called Sukuk transaction by Al Hilal Bank from Abu Dhabi using blockchain is an important news in this context. It shows that DLT is also suitable for the Islamic banking industry.
As the news agency Reuters reported on 26 November, Al Hilal Bank issued a small tranche of a Sukuk via a blockchain. The financial product has a total volume of 500 million US dollars and expires in September 2023, so it has a term of five years. According to Reuters, the volume of the blockchain transaction was one million US dollars. The buyer of the product was an unspecified private investor.
In the press release of the Arab bank it says about Bitcoin formula:
Al Hilal Bank aims to transform the Sukuk market by integrating the Bitcoin formula blockchain into its infrastructure, paving the way for innovative digitized Islamic Sukuks. Read more about it: Is Bitcoin Formula a Scam? Read This Review Before You Sign Up!
Cooperation with Zuger Jibrel Network
The issue was carried out in cooperation with the Jibrel Network. According to the press release, the Swiss FinTech company provided the bank with the technical infrastructure for the transaction.
Jibrel founder Talal Tabbaa speaks of a success:
“We firmly believe that by combining Jibrel’s proven smart contract solutions with the industry expertise of Al Hilal Bank’s digital transformation team, we will be able to provide Islamic financiers with the necessary tools to enable Islamic contracts with the same speed, volume and efficiency as in conventional financing and possibly develop new digital asset classes […]”.
In line with the Koran
Sukuks are financial instruments of Islamic banking. In compliance with the prohibition of interest by the Koran, Sukuk papers do not bear interest. Sukukuk’s offer other forms of profit-sharing for investors, so that a return on the investment can still be achieved. Islamic financial products are often secured with assets such as real estate or land. Investors then participate in the profits via a profit rate.
The Shariyah Review Bureau is responsible for checking the Sharia conformity of Islamic financial products. It was only this summer that Stellar became the first crypto currency to pass the audit in front of the office. From this point on Stellar Lumens (XLM) could also be traded in the Arab world.